The World Economy
Abstract
THE WORLD ECONOMY 29 THE WORLD ECONOMY Section 1. Recent economic developments Chart 1. World GDP growth (per cent per annum, 1995 prices) World economic activity is estimated to have risen by 4 per cent in 2000, the fastest rate for more than a decade. Growth accelerated in all the major geo- graphical areas last year, with GDP rising by an esti- mated 4.2 per cent in the OECD economies and activity recovering strongly in many developing countries in Asia, Latin America and Eastern Europe. World trade was exceptionally buoyant, with mer- chandise trade volumes rising by an estimated 13 per cent. However there is now clear evidence that the growth of the global economy has passed its peak. The economic expansion in the United States began to moderate in the latter half of last year. Business and consumer confidence have fallen sharply in re- cent months, raising the possibility that the long an- ticipated slowdown in growth might prove to be deeper and quicker than expected. A clear signal of the deterioration in economic conditions was pro- vided by the unexpected decision of the Federal Re- serve to reduce interest rates by 50 basis points in early